The return to Chinese rule might still be 11 years away, but already the city has the jitters - the wealthy are pulling their money out and the gangs are tightening their grip.

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Glittering skyscrapers, below left, immense personal wealth and a disdain for the poor born of a ruthless dedication to the principles of laissez-faire economics: these are the outward signs of modern Hong Kong.

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No one in the colony would be surprised by the antics of Brenda and Kai-Bong Chau, above, whose Filipina maid holds one of their mink-clad dogs.

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But few in Hong Kong know that 17,000 men live out their dying days in iron cages, 7ft x 3ft, right, where they lock themselves and their meagre possessions away from prowling thieves.

One autumn day in 1949, when Mao's Red Army was massed at the gates of Canton, a young man with the surname of Ng and the first names of Chun Yim, decided he wanted nothing of the coming revolution, and was going to make a run for it. So he found a leaky old boat, launched it into the muddy waters of the Pearl River, and paddled wildly for a night and a day.

Sunrise on the second morning found him, thanks to the currents and the tides, fetched up under the red, white and blue flag of the United Kingdom in the Crown Colony of Hong Kong, safe, so he has always thought, from the unpleasantnesses of Chinese communism.

Now, 40 years on, most of the Ng family are pulling up their roots, and getting ready to leave Hong Kong, taking with them the fortunes they have made. They are not alone. Theirs, indeed, is a classic story.

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No one imagines that the decadent side of Hong Kong will remain long after 1997. Bottoms Up, one of Kowloon's more famous watering holes, will close before the deadline, says its owner. The mostly Filipina prostitutes and masseurs, will be leaving, too, many after raids by the police.

Ng, like so many millions of his Canton and Shanghai refugee friends, was an enterprising fellow. He took a job as a cook to a sweatshop in Kowloon, across the harbour and thus well away from the British-dominated island of Hong Kong. His cooking, which generally centred on his wife's celebrated recipe for Chiuchow goose, was popular, and Ng prospered.

By 1961 he had saved enough money to buy a tin hut in the New Territories, and opened it as a cafe. In 1970 he opened the doors of the Yee Kee restaurant in what seemed a somewhat unprepossessing site beside a smelly creek under the arch of a motorway, and beside the San Miguel brewery. The local priests blessed the little establishment and the good fortune which such a ceremony guarantees to the Chinese faithful has flowed in abundance ever since.

The Yee Kee restaurant is famous from one end of Hong Kong to the other. A small army of cooks prepares and roasts nearly 1400 of Mrs. Ng's Chiuchow geese every week--400 birds on Sundays alone. Filipina girls wash the dishes and slice the eels and the cuttlefish and grind the spices for the hundreds of sauces. The parking spaces are filled with the BMWs and Mercedes--even the occasional Rolls-Royce--belonging to the ever-loyal customers. Ng Chun Yim's memories of that crazed rush away from the communist armies nearly 40 years ago have almost faded.

Or they had, until four years ago, when Mrs. Thatcher came to town. When she arrived in Hong Kong she was still full of post-Falklands war bluster and made what in retrospect seem to have been woefully tactless remarks about the unending "validity of the treaties" that bound Hong Kong to England. The Chinese were furious. The British premier, they said, was behaving like yet another in a long line of arrogant imperial emissaries--and this time they were having none of it. They wanted Hong Kong back when the lease expired.

Suddenly the Ngs, and millions of Cantonese people like them, were brought face to face with the perils of their future--a future which, because it inevitably involves China, is inextricably entangled with the communist past from which they had fled.

Two years of negotiations between London and Peking followed the Prime Minister's visit to the colony. There were many ups and downs until finally the much-vaunted "Joint Declaration" was published.

The declaration solemnly noted the inevitable: Britain would "no longer play a role in the affairs of Hong Kong". For a while, at least, people in the colony who had hoped this sorry state of affairs might never come to pass sobbed out loud. The declaration was debated, initialled, ratified and signed. The Chinese, the British said, had been frightfully decent about everything, and thus Hong Kong's future was, as all the diplomats happily agreed, "guaranteed".

And it was at this point that Ng--who is either sceptical, prudent or just cynically aware that it is unwise ever to trust a diplomat--decided that his family should bail out.

"Father will stay on," says Danny, the 27-year-old heir to the Ng business empire. "He thinks he's too old to move now. Whatever happens, Hong Kong is his home. But he is concerned for our future. He wants us to get out while we can. So I am going to leave later this winter. We are going to settle, at least for a while, in Sydney."

Ng Senior will be withdrawing HK $2,500,000--about £250,000--from his account at the Hong Kong & Shanghai Bank to finance Danny's new venture, a Chiuchow goose restaurant in Sydney's Chinatown. If all goes well, the second son, Raymond, will follow a year later. And, after that, their sister Kuen Wah may join them.

"Typical!" says Sir Michael Sandberg, from the peace of the chairman's suite on the 34th floor of the world's most costly office building, the headquarters of The Bank--the "Honkers and Shankers", the one from which Ng is about to withdraw his long-saved currency bills. "That's the real problem about Hong Kong's future. It's not that the big investors are getting nervous. It's the Hong Kong people themselves. If they stop investing in the future of Hong Kong--if they pull their money out and take it elsewhere--then the colony has a serious problem. It's all to do with confidence. If Hong Kong has no confidence in itself, then--that's it."

"It"--whatever "it" will turn out to be--becomes an official reality at one second past midnight on Tuesday, July 1, 1997, when the colony is going to be ceded back to those who rightfully own it. The countdown to that moment is painfully slow--like the waiting-time on death row, someone said. No other colony has known so very long in advance the precise date of its demise. But in Hong Kong a date was announced 5000 days ahead. The waiting, in consequence, is terrible.

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Nearly all recruits to the Hong Kong police, above, are now Chinese, but the force's policies are still largely British, like making prisoners break rocks, far left. But it is Gurkha soldiers, led by British officers, who hunt the ever-increasing number of illegal immigrants, left, as they crawl over the fence from mainland China.

"Jittery City," the Far Eastern Economic Review described it. "What will become of us?" people wail at visiting MPs, and High British panjan-drums, and they smile nervously, as though they hope someone will come up with a new solution. But it is going to happen, right on schedule, half way through what in China will be the next Year of the Rat.

What will become of the place? What of its 6 million people? The speculation is endless. Everyone has a theory, everyone a fervent wish. But out of it all just three things seem to stand out. First, there is going to be a steady and a very dangerous increase in the level of crime. Second, a lot of very nervous and very rich people--some nervous because of the way they live their lives, some nervous because they are so rich--are going to bail out of the colony. And third, the effect of these people leaving will make things increasingly grim for those who are left behind.

Hong Kong is approaching a dangerously traumatic moment in her history. The governments involved--the British, the Chinese and that of Hong Kong itself--are, in public, optimistic. They are eager to point out that the diplomatic agreements that have been made are watertight (though not enforceable), their signatories are honourable (or their present governments are) and the colony's future is thus both assured, and certain to be good. Privately, however, there is a general assumption that nothing could be further from the truth.

207N-001-010
With typical Cantonese flair and cunning, the Ng family have risen from abject poverty to become the millionaire owners of a goose restaurant. But the Ng children--Danny, the eldest, is pictured left--are taking their money and leaving to start a new life in Australia.

One night, after a dinner party at a British mansion on The Peak ("I do get so frightfully bored with diamonds don't you?" a middle-aged woman named Vanessa said), I kept an appointment in the one part of Hong Kong that might serve as a grisly warning of the future.

It is known as the Walled City of Kowloon--now unwalled; the ramparts were knocked down by the Japanese during the war--and it is a mile-square Chinese enclave in the middle of the colony. Thanks to a curious footnote in the original treaty that ceded Hong Kong to Britain, the Walled City has--latterly in theory more than practice--remained under the magistracy of the mainland.

All manner of illegality flourishes there, generally not bothered by the Royal Hong Kong Police. Some of the illegalities are benign--there are scores of unlicensed dentists, for example, their surgeries dominated by tanks of huge and slowly-swimming fish to lull their patients' nerves. But others--heroin dealers, pimps, the organisers of some of the more menacing Triad gangs are less amusing, and are flourishing.

I was there to meet a young English woman named Jackie Pullinger, who, with a small band of missionary youths and girls, has been trying for the last decade to purge the Walled City of some of its miseries. Every week she gathers up a hundred or so villains and persuades them to wander through the rat-running, fungus-dripping, rubbish-filled alleys of the city, to hear her lecture on the evils of addiction or pornography or subjection to the Triad gangs. Each time a few of them agree to be helped: they are taken off to a pleasant British-built mansion and prayed over, taken through their "cold turkey" nightmares, carefully weaned off drugs or drink or whatever, and given back some sense of personal pride.

It is all very laudable, and there are many in Hong Kong who regard Miss Pullinger as a saint. But she isn't doing much good, as she will be the first to admit. "We try to help--but frankly it is getting worse and worse. And this is why the Walled City, in a sense, is part of what the future may be all about. It is all to do with the Triads. They are working overtime now, knowing that they've only got 11 years to run before the Chinese come in and put them out of business. Their grip is getting stronger. So there are more gangsters and more drug addicts and much more unhappiness. It is not a happy situation."

Out in the wilder reaches of Kowloon, crime and corruption has been revitalised. Triad-run drug trafficking is soaring. Ships at Yau Ma Tei are regularly, and quite openly, unloaded by addicts who are paid, not in cash, but in heroin. Illegal immigrants from China--the British army says it has detected a 50 per cent increase this year- are flooding in to join the gangs. Opium divans, where sleepy old men suck wanly at pipes in an atmosphere of somnolent befuddlement, open more frequently than they can be raided and closed. Young boys swallow pellets of heroin attached to strings, and vomit them up in alleys to light them and then "chase the dragon" with the magic vapours.

The number of illegal massage parlours and taxi-dancing houses and "villas" where scores of male clients sit in rows of airline seats to seek their brief release is increasing dramatically. The police--"localised" to an ever-increasing extent, as is required during the rundown to 1997--are now said to be ever more busily taking bribes or being intimidated or for other reasons looking the other way. Sinister men with dragon tattoos on their triceps, and belonging to such Triads as the 14K, the Water House and the Respect & Justice Gangs, are running huge new fiefdoms from dingy tenement buildings - fiefdoms that (to the chagrin of the FBI and New Scotland Yard) now send their tentacles out to San Francisco, downtown Manhattan, and across to Leicester Square.

"A major new problem," is how the government describes the situation. "The Triads have 11 more years in which to make their fortunes. They'll be hard to stop."

207N-001-011
Thousands of men and women sleep on the streets in Hong Kong, unable to find housing, But even in the open, under a flyover in the slums of Mong Kok, the Chinese do the best they can to make themselves a comfortable 'home'.

No one doubts, whatever the reassuring tones of the Joint Declaration, that the mainland Chinese will crack down. Criminals will be stamped on, hard--hence the vastly increased Triad activity today. But there is already some fairly tough justice being meted out by the colonial authorities.

Young thugs are forced to break rocks with sledgehammers at the Sha Tsui Detention Centre on Lantau island. Murderers are still sentenced to the gallows (though the governor invariably uses his prerogative to commute). But in China judicial attitudes are much more stringent: villains die by the score, shot in the head, hanged by the neck, buried in paupers' graves. One hapless Hong Kong woman saw her husband off on a trip over the border to mainland China earlier this summer, and heard on the local radio a while later that he had been picked up in Canton, charged with fraud, tried, sentenced to death and taken out into a field and shot. The Hong Kong government, in the words of one of its highest authorities, felt "choked with rage." Why, one British mandarin asked, almost in despair, "don't they bother to try and understand what the reaction will be? They say they want to keep this place stable. But they shoot people--and Hong Kong people, at that--right under our noses. How's that going to inspire confidence?" So criminals--of whatever degree of badness--think they have good reason to be anxious about 1997. But they are not alone.

Pat Sephton, a Liverpudlian and a former model, runs a Tsim Sha Tsui night club known as Bottoms Up. It offers what one might call "characteristic" Hong Kong entertainment--bawdy, almost innocent naughtiness. But she guffaws sardonically into her brandy-and-soda at the very notion that the Chinese have "guaranteed" the continuance of such life-styles. The declaration promised that they would. If it was "characteristic" of Hong Kong it would remain untouched.

"You think they'll allow all this after 1997? Not a chance," says Pat Sephton. Her night club is not, by the standards of Bangkok or Manila, particularly bold. Men sit around red-velvet pits in which young women, who display a great deal of their anatomy, repose in artistic postures, pour drinks, and chatter. The expatriates drink beer, the Chinese drink brandy (and drink more of it, per head, than anywhere else in the world), and Pat Sephton makes a great deal of money.

But it will all end soon, and Pat Sephton is now looking for somewhere else to go. "Of course, I know they assure us nothing will change. But you remember what happened to Shanghai? You remember Blood Alley and all the girls in the clubs along The Bund? They stayed for a month or two, and then they were forced out. There's no way a communist administrator is going to allow men to ogle at naked girls.

"The northern Chinese are very suspicious of the Cantonese, as well. They don't trust them. They think the Cantonese are all crooks and wide boys. Be serious! This will never be tolerated. I'll have to move on. All these places will vanish. Wanchai will close down. No more Suzy Wongs here. Do you think the American navy will want to call at a communist port to get a girlfriend? Do you think they'll be allowed to?"

Sex, the northern regime believes, is for procreation and not for much of that. It is most definitely not designed for fun.

But if sex is bad, you should see money. Money, the pursuit of it and the love of it, is wholly repugnant to all that socialist China stands for. Money is for reconstruction and development and not, in Hong Kong or anywhere else, for the pursuit of pleasure.

The latter is a doctrine that the people of Hong Kong, for whom money is the only True God, are going to find hard to take. It won't just be people like diamond-weary Vanessa who will have cause for concern; or Brenda Chau, with her shocking pink Rolls-Royce, her shimmering golden bathroom, her minkcoated poodles, or the dandies on their gin-palaces at the Aberdeen Yacht Club or the gaudy celebrants we see in the pages of the Hong Kong Tatler, who will be worried. It will be anyone for whom Hong Kong is a centre for personal profit--and that, given the nature of Cantonese entrepreneurialism and English colonialism, means an extremely large number of people indeed.

The Ng family is the Chinese end of the spectrum. The legions of "Jardine Johnnies", the bright, the young and the occasionally chinless Britons whom daddy or the careers master sends over to labour and play under the banner of such organisations as Jardines, or Swires, or Hutchison, or The Bank, are at the other end. (Since 1985 the number of Britons in Hong Kong has dipped below the number of Americans.)

Whether Ng millionaire, or Jardine Johnny, or Wall Street money magician, all those who do best here treat the colony merely as a place where they, personally, can profit mightily. If you leave Hong Kong without having made a small private fortune, then you've probably missed an opportunity which will never occur again.

Today, there is a mood of dismal scepticism among this group. The new masters of Hong Kong will sympathise little, they believe, with any such personal ambitions. Entrepreneurs, fixers, profiteers, commission-men--all those people for whom Hong Kong is cash heaven--suddenly have no future at all.

Maybe, as the government tells us, China wants to allow Hong Kong to remain "a major world financial centre". But, even if it can do just that, the dour cadres who run today's China have precious little knowledge and, even now, precious little will to allow it remain a place for individuals to make the quick bucks, the great deals, the "nice little earners" that, for good or ill help to make Hong Kong the town it is.

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The Indian community reckons it has a gloomy future after 1997. 'The British don't want us,' says George Harilel Aharilela, one of Hong Kong's 6000 Indians who dominate a fifth of the colony's trade. 'The Chinese loathe us. Where do we go ?”

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Ronald Li, chairman of the Hong Kong Stock Exchange, has moved much of his fortune away from the colony.

"From that point of view it's dead on its feet," said a Jardine man whom I met passing though a neighbouring Pacific capital. "No one in their right mind would invest a red cent here after, let's see, the mid-Nineties. It'll be OK for another few years. Short-term money is still here to be made--that's why the government makes out that it's all so buoyant. People are still bringing cash in, making quick bucks. But look beneath the surface. People are scared. There's no long-term confidence. Ask them where they'll go, and they all reply Tokyo's the place to be. Or NewYork. Even London. That's where the smart money's going."

My friend at Jardines, my dining companion Vanessa, the Ng family--all of these people will survive. They have the option to get out. But there are others, millions of others, who'll not be so fortunate.

Like those, for instance, who live on the sixth floor of a building on Ivy Street in a slummy part of Kowloon known as Tai Kok Sui. Number 411 is one of several hundreds of flophouses for the so-called "cage men"--of whom there are said, by Oxfam, to be some 17,000 in Hong Kong.

In a space no bigger than a fair-sized British drawing room live 105 men, most of them old, all of them poor. Each is confined to a cage, 7ft x 2ft6in x 3ft, in which he, and all his worldly goods and chattels, can be locked, secure from theft and loss. The cages are stacked in threes, so the room looks like a vivisection lab, with scores of specimen animals each locked up behind wire grilles.

Inside one cage was a man named Timothy Wu. He was thin, tired and very old. Stacked around him was his entire world: a cup, a toothbrush, an empty Suchard chocolate tin, a rice bowl and a pair of chopsticks, a pair of broken spectacles, a jar of peanut oil, a bottle of pills for a digestive problem, a jar of sugar, a towel, two shirts, a fan, two saws, a box of Wonderful brand detergent and a tin of Shelltox cockroach killer. Other cages were similarly filled with the bric-à-brac of paupers' lives. Most of the men had been living like this for 10 years, and their numbers were not declining.

Father Sean Burke, an American who has many years of experience among the Hong Kong homeless, is appalled and angered. "Thousands of men sleep out on the streets. Thousands are confined in cages. Tens of thousands live in the most dreadful shanty towns. The number of mentally ill or crippled people who escape the attentions of the government is going up remorselessly. The government says it is doing its best. In fact it is doing precious little. This is not a society that helps its unfortunates -and there are a lot of unfortunates in Hong Kong."

A small army of radical social workers--in particular an elderly Englishwoman named Elsie Elliot Tu, who has spent a thankless lifetime among the poor--attempts to remind Hong Kong of its social problems. "The problem is bound to get worse during these remaining years," says Elliot Tu, "Money is going to drain away from the colony, and these people are going to win less and less attention. It is a sorry matter. The outside world thinks Hong Kong is all glitter and dazzle. In fact, a huge number of people are badly housed or poor or both. And once China takes over there's no way they're going to be able to afford to help. The slums will get nastier, and there will be more of them. That's sure."

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Sir Michael Sandberg, soon-to-retire chairman of the Hong Kong and Shanghai Bank, wonders whether the Cantonese are beginning to lose faith in themselves, which would be 'fatal' for the territory, he says.

No more than a mile separates Sir Michael Sandberg's air-conditioned box at the Jockey Club in Happy Valley from the foetid hothouse of cages across on Ivy Street. Both rooms are about the same size. In one, palms flutter in cool breezes, the murmur of talk and the clink of crystal is only occasionally disturbed by the bleep of a vest-pocket device signalling a change in the yen-dollar rate, or by the anxious drumming of a punter's fingers on the leather tabletop as he waits for his million-dollar filly to romp home.

In the other room there is sweat and noise and the greasy smell of cheap cooking, and a constant din of Chinese pop music and screeched commentaries from the racecourse. There are gamblers in both rooms: horse-racing (and for the Chinese mah-jong, too), is a colonial obsession. The rooms have something else in common: when each race is over, the occupants all turn to the single topic of conversation in the colony: What to do in '97 ?

It is in the air-conditioned rooms that people have a choice. And it seems now, two years after the Joint Declaration was first published, that where people have a choice, most intend, sooner or later, to bail out.

At my table in the Jockey Club there was a banker (who will move his base of operations to Tokyo), a British civil servant (who will take early retirement), a stockbroker (who will "hang on until I make my pile and then, as the saying goes, 'Press Button B"') and a Vanessa-type who said she "simply couldn't bear to live here after 1997 as the place will be positively ruined," and has already bought herself a bolt-hole, in Andorra. (Her husband, it turned out, was a yacht broker; she claimed to be quite unworried by his going to live in a country without a coastline.)

This was typical in a month of questioning. Every one of those who have the legal or financial ability to pull out of Hong Kong said they would do so. Oh yes, they would nearly all wait a while, "to see how things turn out," or "because in the short term there is money to be made," or "because we don't want to be seen to be deserting the sinking ship." But they are going, and taking their money with them, just like Danny Ng, and Raymond, and Kuen Wah. As one magazine remarking on the growing exodus put it, "the pillars that support Hong Kong are smouldering."

Few of the major figures here will admit their anxieties in public. I had heard, for instance, that the chairman of the glittering new Stock Exchange, Ronald Li, had recently moved most of his money out of Hong Kong, and kept only a little cash, and a lot of diamonds. I asked him if this were true. His jaw, dropped--but only for a second. Then he smiled broadly, and nodded. "Diversification!" he said. "That's the name of the game in this town. Play safe. That's all I'm doing."

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Sir Edward Youde, the Governor of Hong Kong counsels optimism.'It was a very good agreement, reached by honourable men,” he says of the Joint Declaration.

Sir Edward Youde, the wise and kindly Governor whose retiring nature has nevertheless earned him the nickname "Youde the Obscure," insists that the fundamental strength of Hong Kong remains. And Sir David Akers-Jones, the chief secretary, an old Colonial Service figure who has spent half of his life in the China of which he is knowledgeable and fond, is similarly optimistic. He realises that Triad crime is going to increase during the closing years, and that a number of small entrepreneurs will decide to leave, "though probably only to establish their rights to have another passport--they may well come back home." But the Joint Declaration, he insists, is a valuable document, "since it shows that the Chinese want to preserve Hong Kong, as much for themselves as for the good of Hong Kong. It is in their interests to keep it vigorous, and I believe it is part of their overall plan for China to keep Hong Kong as the dominant port and trading centre."

But Sir Edward and Sir David speak with the voice of, or on the advice of, the Foreign Office. And therein lies a major problem--one which lies at the root of much of today's anxiety. For hardly any Chinese that I talked to has any faith, or trust, in the British Foreign Office.

One can sympathise. The Foreign Office has made a number of bad decisions and given bad advice on Hong Kong. It told Mrs. Thatcher the treaties were still valid and advised the British Army to build new barracks assuming the renewal of the colonial lease. It advised GCHQ to install a new spystation and the BBC External Services to build a long-range transmitter. Both must be dismantled before 1997. The colony's energetic Indian community--which will be left effectively stateless in ten years' time is particularly cynical. The Foreign Office persistently ignores all requests by them to be given citizenship of the UK. "The Chinese won't want us," said one, "and now the British have rejected us, too. We are not that many. Why are they being so harsh? Are they just looking for our ill-will?“

Emigration from Hong Kong is already turning into a major problem. Many of the Indians are rich enough to leave and buy some form of citizenship abroad (a quarter of a million pounds-worth of investment being the going rate for an officially granted British passport). Tens of thousands of less well-off Chinese are now applying for residence permits in America, Canada and Australia (though the Hong Kong government has demanded that no country says how many, for fear of starting a flood). Smaller countries--Fiji, Bolivia and Belize--have opened offices in Hong Kong, openly touting for the Cantonese with know-how and money.

But the vast majority of Britons-- for that is what Hong Kong people are, and we should not forget it--have no chance of leaving. For them, this countdown to 1997 is a gruesome exercise, like the slow asphyxiations once ordered by the court stranglers in Imperial China.

For all of them the subsidiary deadlines will come and go: 1987, the start of the last ten years. 1990, the start of the "terminal decade", the year when confidence is generally expected to collapse like a soggy soufflé. 1992, the half-way point between the declaration's signature and the treaty's reality, the final "moment of truth".

For them, one second past midnight on that Tuesday morning in 1997 is the crucial moment. The last of the British rulers will go; and in their places 1000 cadres of the communist party will fan out across the colony, like locusts on to a waiting cornfield. They will ensure that Hong Kong falls into line with the terms of the Joint Declaration as they perceive it, on instructions from the Politburo 2000 miles to the north.

The Hong Kong Chinese, those left behind, will, for better or for worse, accept their lot. "That's the most noticeable thing," said Pat Sephton, as she contemplates the imminent closure of her night club. "Perhaps they may have hoped otherwise, once. But now they have developed a sense of arrogance towards the British. They know that after all this time they, the Chinese, are getting Hong Kong back.

"Sure, it may be a communist regime that's taking over. Sure, they may be northern Chinese who'll be directing the place. But the fundamental thing is that the Chinese are winning the colony back, and we barbarians are ending our stay here for ever. And that is not a bad thing. The Chinese are getting back their land, and their pride. They aren't having to lose face any more about being ruled by someone else. All I have to wonder is just what they'll make of it without us?"